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Lease rental negotiations to save SriLankan USD 135 mn

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In an interview with ‘Daily News Business,’ he said that SriLankan Airlines has purchased 12 aircraft on lease and payments are still being made for them making it the biggest financial burden for the airline. “However we have renegotiated with them and managed to trim this payment.”

In October 2013, The International Lease Finance Corporation (ILFC), signed a 12-year lease agreement with SriLankan to get three A350-900 aircraft. ILFC also earlier signed a lease agreement with SriLankan for two A330-200s and one A340-300. In addition, the airline also ordered four A350-900 aircraft with Airbus, a European multinational aerospace corporation.

In 2020 February, it was revealed to the Parliament’s Committee on Public Enterprises (COPE) that the airline had paid 17.5 million dollars to Aercap to cancel one A350-900 aircraft and USD 98 million for three others totalling USD 115.7 million during the tenure of Chief Executive Officer Suren Ratwatte and Chairman Ajith Dias.

However, the then COPE members questioned whether the originally mentioned cancellation cost of USD 154 million was negotiated down and if so how.

The national carrier suffered a loss of Rs. 372,015 million as of March 2021 and the Minister said that with tourism picking up, the launch of new routes and increased cargo operations the airline is making a turnaround from huge losses. “India which has around 35% of the SriLankan operations was completely shut down and with this sector opening, we see a silver lining. In addition, the cargo market is booming and this is yielding the much needed additional revenue,” he said.

The airline, due to COVID restricting passenger travel, converted some of its passenger aircraft to cargo which has proved to be very productive. “In addition, we are now planning to launch cargo flights to the Maldives from Mattala Rajapaksa Airport (MRIA) soon.”

He said that this for the first time offers direct intentional market access especially for Southern and Eastern province fruit and vegetable farmers to export their produce beyond Sri Lanka.

“We are also looking at purchasing aviation fuel directly from international markets and offer it to airlines at lower rates enticing airlines to fuel at MRIA opening up a new business vertical.”

The Minister also said that MRIA is offering services with concessions including landing and parking fees removed entirely in the first year and the second, third and fourth year of operation, 75%, 50% and 25% of the total charges would be waived off to attract airlines. “Several new airlines are to fly to MRIA this year,” he also added.

Furthermore, airlines entering into an agreement to operate a minimum of one scheduled flight per week to the Airport would be offered a 50% discount on the landing and parking fee at Bandaranaike International Airport, Katunayake, for the first year.

Under the concessions package, international airlines would be exempt from paying the airport emigration charge of US $ 60 for a period of two years, starting from the operation commencing date.

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